IC original manufacturers reduce inventory and promote transformation: passing through stronger uncertainty (in-depth interpretation of Q1, 2025)

1. Panorama of Q1 financial reports of seven major IC manufacturers: full comparison of performance, inventory, and transformation

1. Texas Instruments (TI): The analog leader took the lead in rebounding, ending the 9th quarter decline

• performance: Revenue$4.07 billion(+11%); simulation proportion78.89%, becoming the core growth engine
• Inventory：240 days(MoM - 1 day), still at a high level but the turning point has appeared
• Highlights: Industrial + automotive demand picks up, Q2 revenue guidance$4.35 billion（+13.8%）
• challenge: 300mm factory depreciation suppresses gross profit margin; MCU competition is fierce; China’s domestic substitution intensifies
• strategy: stick toSimulation + car specsHigh-barrier track shrinks low-margin consumer electronics

2. STMicroelectronics (ST): Deep fall at the bottom of the cycle, radical transformation to survive

• performance: Revenue$2.52 billion(-37.3%); Net profit$56 million（-89.1%）
• Inventory：167 days(MoM + 45 days), serious backlog
• Dilemma: Capacity utilization rate is only75%;Idle capacity costs$123 million; Automotive/industrial demand plummets
• Transformation: layoffs5%; Shut down inefficient production lines; Increase investment12-inch silicon + 8-inch SiC;Cost reduction in 2027US$300-400 million

3. Infineon: Automobile + AI server support, relatively stable

• performance: Revenue3.591 billion euros(Flat year-on-year, +5% month-on-month)
• Highlights: Automotive, data center power supply/SiC business is strong; orders have not slowed down
• pressure: Electric vehicle penetration is slowing; industrial PMI is sluggish; power/MCU competition is intensifying; exchange rates are eroding profits

4. NXP (NXP): Inventories rebound, automotive business under pressure

• performance: Revenue$2.84 billion(-9%); Automotive business$1.674 billion(-7%, accounting for 59%)
• Inventory：169 days(MoM + 18 days), reversal of destocking
• main cause: Chinese market is weak; Japanese customers delay purchases; high-end MCU price war
• risk: CEO change; inventory control disorder; local competition intensifies

5. ON Semiconductor: AI business explodes, overall losses, inventory reaches new highs

• performance: Revenue$1.45 billion（-22%）；Net loss $486 million
• Highlights: SiC orders are strong;AI data center business +100% year-on-year
• Inventory：219 days(all-time high)
• Countermeasures: Layoffs; termination of South Korean SiC factory; focus on cost-effective production lines in the Czech Republic; free cash flow$455 million（+72%）

6. Microchip: MCU is in the cold winter, de-banking has achieved initial results

• performance: Quarterly revenue$970 million(-26.8%); full year$4.402 billion（-42.3%）
• Inventory：251 days(QoQ - 15 days); 1 fab closed
• Dilemma: MCU price war is fierce; automotive/industrial demand is weak

7. Renesas: decline across the board, internal inventory decline

• performance: Revenue308.8 billion yen(-12.2%); Net profit73.3 billion yen（-30.8%）
• business: Automotive, Industrial/IoT all **-12%**
• Inventory: Decreased month-on-month, but still at a high level

2. Three core characteristics of the industry: cyclical differentiation, high inventory, and the sudden rise of AI

1. Analog vs MCU: completely misaligned cycles

• Analog chips (led by TI)：Be the first to recover
  • Long life cycle, high barriers, weak cycle; automobile/industry just needs support
  • TI ends 9 consecutive quarters of decline; Q1 year-on-year **+11%**
• MCU / General Logic (ST, Renesas, Microchip)：Depth adjustment
  • Downturn in consumer electronics; impact of domestic substitution; fierce price war
  • Year-on-year sales for most manufacturers are **-10%~-40%**; inventories are high and utilization rates are low

2. High inventory pressure across the industry (2025 Q1)

• TI:240 days
• Microchip:251 days
• ON Semiconductor:219 days
• NXP:169 days
• ST:167 days
• Industry health line：90–120 days
• Current situation: Common160–250 days, it still needs to be removed from the library2–4 quarters

3. Structural growth highlights: AI and SiC

• AI server: Infineon, ON Semiconductor Power/SiCDouble growth
• SiC power: ON Semiconductor, Infineon, and ST have strong orders (electric vehicles + photovoltaics + AI)
• Automotive high-end chips: ADAS, BMS, and domain control are still resilient

3. Six major breakout strategies for major IC manufacturers: cost reduction, focus, transformation, and localization

1. Production capacity reduction + layoffs and cost reduction

• ST: 5% layoffs; shut down inefficient production lines; reduce costs in 20273–400 million
• ON Semiconductor: Layoffs; Termination of Korean SiC Factory; Focus on Czech Republic
• Microchip: Closing factories; shrinking non-core product lines

2. Silicon + SiC dual-wheel upgrade

• ST / Infineon / ON Semiconductor:12-inch silicon + 8-inch SiCDual-line expansion
• Abandon 150mm and inefficient 200mm production lines; increase unit output value

3. Comprehensive shift to high-end products

• TI: Abandon low-end analog/MCU; focusAutomotive + Industrial + High Voltage
• NXP / Renesas: High-end automotive MCU/MPU; edge AI
• ST / Infineon / ON Semiconductor: SiC, IGBT, automotive power

4. Acceleration of localization in China

• ST / Infineon / NXP: Increase wafer / packaging and testing / design layout in China
• Close to the market; avoid tariffs; respond to supply chain security

5. Strip away low gross profits and focus on main business

• Wingtech: Selling ODM (4.389 billion); focus on semiconductors
• Vail: Changed its name to Haowei; Focus on CIS + automotive

6. Embrace AI computing power

• Power management, SiC, and high-speed interfaces directly benefit from the outbreak of AI servers
• Infineon × NVIDIA, Navitas × NVIDIA:800V HVDCData center power supply

4. Industry Outlook: Three Major Trends in the Second Half of 2025

1. Simulation continues to lead the way, MCU bottoms out and rebounds in the second half of the year
   • Simulation: TI/ADI takes the lead in price increase; Q2–Q3 growth rate10%+
   • MCU: The decline stopped at the end of Q3; recovery in 2026
2. Inventories are slowly being depleted and prices are gradually stabilizing
   • Industry inventories are expected to fall to120 dayswithin
   • High-end/auto-spec products are the first to see price increases; low-end products are still under pressure
3. Domestic substitution is accelerating, and major international manufacturers are retreating to the high end
   • Analog/MCU/Domestic share of mid- to low-end power30–50% in 5 years
   • International factory focusAutomotive specifications, SiC, high-speed interface, AIContour barrier zone

5. Summary